The world has shifted from specie (gold, silver, etc.) with an intrinsic (and occasionally numismatic) value to paper specie and checks to electronic currency (ATM cards). Bitcoin is a blending of gold/silver and electronic currency.
(Fox News) Officials in a small Appalachian town that has seen its coal industry dry up over the past two years are hopeful that Bitcoins, the Internet currency, can play a driving force for jobs.
Both the mayor and police chief from Vicco, Ky., a town of about 330 residents located about 130 miles southeast of Lexington, said they will donate their entire paycheck to a Bitcoin account formed in the town’s name.
“If we’re willing to take a chance to put ourselves out there, some company should take a chance on us,” Tony Vaughn, the police chief, said. “At this point, we’ll try anything.”
Vaughn said he was approved by the city commission to have his entire take-home pay exchanged from the U.S. dollar to Bitcoins. His salary is believed to be the first instance of a government worker being paid in the Internet currency.
What is Bitcoin?
Bitcoin is an open source peer-to-peer electronic money and payment network introduced in 2009. Bitcoin has been called a cryptocurrency because it uses cryptography to secure transactions. Digitally signed payment messages are broadcast to and verified by a decentralized network of computers all over the world. Specialized computers use a proof-of-work system to prevent people from copying and spending the same bitcoin multiple times, a problem for digital currencies known as double-spending. The operators of these computers, known as “miners”, are rewarded with transaction fees and newly minted bit coins. (Wikipedia)
Bitcoins are stored by associating them with cryptographically generated addresses. These addresses may be stored on web services, on local hardware like PCs and mobile devices, or on paper print-outs. A collection of Bitcoin addresses is known as a wallet. Thefts of bitcoins from web services and online wallet services have been covered in the media, prompting assertions that the safest way to store bitcoins is in a paper wallet generated by the owner on an uncompromised computer.
Speculators have been attracted to Bitcoin, fueling volatility and price swings. As of November 2013, the use of Bitcoin in the retail and commercial marketplace is relatively small compared with a relatively large use by speculators.
Because Bitcoin is not national currency, transactions can not be tracked and can not be taxed. Since it is held in strong encryption, it can be moved across national boundaries without being declared.